The Boston Red Sox: Team of the Century?

Nov. 7 (Bloomberg) -- The Boston Red Sox have won the World
Series three times since 2004. This seems a good time to ask:
How many times will they win it all this century?

A plausible answer will presumably lie between three and
26, the number of times the New York Yankees won the World
Series in the 20th century (the Yankees have won a total of 27
times, most recently in 2009).

There is obviously a great deal of randomness in baseball,
and no team can dominate every year. Even during their dominant
spells, the Yankees would sometimes fail to win it all (they are
27 for 40 in the World Series, where they first played in 1921).

The Red Sox’s history should make us cautious about even
short-term predictions: They won the World Series five times at
the beginning of the 20th century (starting with what was
arguably the first of the kind in 1903), and then didn’t win
again after 1918. Just in the past 10 years, they have
experienced real lows -- including last season -- as well as
spectacular highs.

Still, if we can understand why the Red Sox have done so
well this century, we might be able to make an educated guess
about the broad historical pattern: Are they the Yankees of
1923, poised on the cusp of greatness, or will that most
heartless of all statistical phenomena, mean reversion, now
extend its cold fingers?

Distributed Leadership

Tom Kochan, my colleague at the Massachusetts Institute of
Technology, argues that the Red Sox represent the best in
distributed leadership, teamwork and cooperation. He must be
right that, seen this way, they are a model to us all.

But how much of the Red Sox’s recent run is due to their
precise mix of players, managers and owners -- and will these
elements remain favorable? Alternatively, how much is more
simply about economics? (I’m ruling out that their facial hair
was a crucial element, based on Roger Angell’s analysis.)

The Red Sox won the World Series this year largely because
David Ortiz hit almost .700 in the series (he was at .733
through five games, and finished 11-for-16, which is .688) and
had an on-base plus slugging percentage of 1.948. Also, Boston’s
pitching was just a bit more outstanding than what the St. Louis
Cardinals had to offer.

The Ortiz-plus-pitching explanation would suggest that the
Red Sox may be done. Ortiz, normally the designated hitter, is
37 and reportedly had his ankles wrapped in ice after at least
one game. The demands on modern pitchers also make it hard to
predict how long a career will last.

Pitchers John Lackey and Jake Peavy are under contract
until 2014, and the club has an option on Jon Lester for next
season (for precise conditions and more contract details, see
this link). Ortiz is under contract through the end of next
season. The length of contracts for other stars varies, but it
is easy to see how this team could be very different in a year
or two.

More generally, it is harder to sustain dynasties based on
individual players in the age of free agency. Stars often leave
for more money -- and that’s part of what happened to the Red
Sox after their historic 2004 win. Alternatively, the team may
end up overpaying to retain fan favorites long past their prime.
This year’s Yankees, with the second-largest payroll in the
sport, might be considered something of a cautionary tale.

The manager obviously matters. When to intentionally walk a
batter is a crucial decision, and one that didn’t always go well
for Mike Matheny, manager of the Cardinals. Lifting or leaving
in a pitcher under pressure is always a huge call. John Farrell,
the Red Sox manager, is on a four-year contract that ends in
2016.

Pep Talk

But baseball isn’t soccer, where managers are frequently
all-important (see, for example, Manchester United’s struggles
just a few months after Alex Ferguson retired). The Red Sox have
won their World Series under two managers, and while managerial
decisions can lose the day, they are unlikely to be the
cornerstone of success. I agree with Kochan that the relevant
model for baseball resembles “distributed leadership,” in
which various people step up in different ways to contribute
(see Ortiz’s impromptu pep talk in Game 4).

Owners also matter, and it is hard to find fault with the
group led by John Henry, Tom Werner and Larry Lucchino that
bought the Red Sox in 2001. The most important decision must be
how much the owners trust the general manager. When do they push
him to do better? When is there a structural break (a player is
too old to perform) and when is a slump just part of the normal
process? The general manager makes the big personnel calls, but
the intangible and unobservable (to outsiders) relationship with
the owners must be essential.

These owners are on their second general manager. Theo
Epstein did well and has moved on to the Chicago Cubs. Ben
Cherington has enjoyed great early success, but this is a high-pressure job and GMs have rarely served more five years with the
Red Sox.

In any case, it is hard to see even the best ownership
structure lasting more than two or three decades.

Probably the biggest long-term driver of results is also
the simplest: economics. The Red Sox had the fifth-largest
payroll in baseball this year, and this kind of financial
advantage presumably will last. Baseball has income-redistribution mechanisms across teams and these kinds of
details may change over time, but teams with a large number of
supporters generate more revenue over time. (Did I mention that
I’m a Red Sox fan?)

Baseball, like many other sports, seems likely to turn out
like English soccer, routinely dominated by half a dozen or so
clubs -- with the occasional aberration in single-elimination-format competitions.

To date, World Series wins have been widely distributed
(other than the Yankees). Baseball in the coming century is
unlikely to be dominated by one team. But the sport is likely to
remain permanently tilted toward the already-rich, like the rest
of U.S. society.

In the 21st century, the Red Sox are likely to win the
World Series 12 times. Many of those wins will come with their
current ownership structure.

(Simon Johnson, a professor at the MIT Sloan School of
Management as well as a senior fellow at the Peterson Institute
of International Economics, is co-author of “White House
Burning: The Founding Fathers, Our National Debt, and Why It
Matters to You.”)